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Europe Responds Swiftly to US Tariffs, Threatens Retaliation

Reaction to U.S. President Donald Trump’s decision to slap tariffs on steel and aluminum imports from American trading partners — including the European Union — came fast and furious, with threats of retaliation and warnings they risk sparking a trans-Atlantic trade war.

European Commission President Jean-Claude Juncker said the European bloc would respond by imposing penalties of its own on American exports.

“Today is a bad day for world trade,” said Cecilia Malmström, the European trade commissioner. EU officials previously informed the World Trade Organization of the bloc’s plan to levy duties on $7.2 billion worth of U.S. exports if the Trump administration proceeded with threats to impose a 25 percent tariff on steel imports and 10 percent on aluminum.

Canadian and Mexican officials also threatened retaliatory responses but have as yet not indicated which U.S. products they will target. Both countries had hoped that the White House would continue to exempt them from the tariffs.

National security cited

Europe, along with Canada and Mexico, had been granted a temporary reprieve from the U.S. tariffs after they were unveiled in March by Trump, who said the levies were needed to stem the flood of cheap steel and aluminum into the U.S. and that to impose them was a national security priority.

In Europe, there was disappointment, but less surprise.

Juncker called the U.S. action “unjustified” and said Europeans had no alternative but to respond with tariffs of their own and to lodge a case against Washington with the World Trade Organization in Geneva. “We will defend the union’s interests, in full compliance with international trade law,” he said.

The EU had already publicly announced that in the event tariffs did go ahead, it would impose levies on Levi-made jeans, Harley-Davidson motorbikes and bourbon whiskey.

British officials appeared the most alarmed. The government of Theresa May had pinned post-Brexit hopes on securing a trade deal with the U.S., and the imposition of tariffs on steel is adding to fears that negotiating a quick trade liberalization agreement with Trump looks increasingly unlikely.

“We are deeply disappointed that the U.S. has decided to apply tariffs to steel and aluminum imports from the EU on national security grounds,” a government spokesman said. “The U.K. and other European Union countries are close allies of the U.S. and should be permanently and fully exempted.”

Discussion at summit

He said the British prime minister planned to raise the tariffs with the U.S. president personally in Canada at a scheduled G-7 summit of the seven largest advanced economies. That summit is likely to be a frosty affair, much like last year’s in Taormina, Sicily.

With a week to go before the June 7-8 summit, there’s still no final agreement on the agenda, British and Italian officials said. Canadian Prime Minister Justin Trudeau had earmarked climate change, women’s rights and economic growth as key issues, but there has been pushback from Washington. Thursday’s tariff announcement by the White House will further complicate agreeing on a G-7 agenda.

German reaction to the announcement of the tariffs was among the fiercest. Chancellor Angela Merkel dubbed them “illegal.” Manfred Weber, a key ally of the German chancellor and leader of the biggest bloc in the European Parliament, accused the Trump administration of treating American allies as enemies.

“If President Trump decides to treat Europe as an enemy, we will have no choice but to defend European industry, European jobs, European interests,” he said. “Europe does not want a trade conflict. We believe in a fair trade regime from which everybody benefits.”

Wilbur Ross, U.S. commerce secretary, who’s in Europe and has been pressing the EU to make concessions to avert the tariffs, dismissed threats of a trade war, saying retaliation would have no impact on the U.S. economy. He held out hope that the tariffs could be eliminated, saying, “There’s potential flexibility going forward. The fact that we took a tariff action does not mean there cannot be a negotiation.”

Business leaders cautious

Some European business leaders have urged their national leaders to be restrained in response, fearing a tit-for-tat spiral could be triggered quickly. Britain’s Confederation of British Industry warned against overreaction, saying no one would win on either side of the Atlantic if a major trade war erupted.

The director of UK Steel, Gareth Stace, said he feared there was clear potential for a damaging trade war.

“Since President Trump stated his plans to impose blanket tariffs on steel imports almost three months ago, the U.K. steel sector had hoped for the best, but still feared the worst. With the expiration of the EU exemption now confirmed to take effect tomorrow [June 1], unfortunately, our pessimism was justified, and we will now see damage not only to the U.K. steel sector but also the U.S. economy.” …